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tv   Worldwide Exchange  CNBC  October 8, 2013 4:00am-6:01am EDT

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you are now watching "worldwide exchange." i'm right lane ross westgate. a recap of the headlines today, day eight of the u.s. government shutdown. and congress and the white house are still pretty much dug in. although one lawmaker is circulating a plan to raise the debt ceiling. china and japan show their unease with the stalemate. once again, the stoxx 600 after the world's oldest bank unveils a bigger than expected
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capital hike. and investors try out the latest cost cutting measures. the telecommaker is shedding an additional 10,000 jobs by around 14%. a very good morning to you. if you've just joined us in europe, good afternoon. if you're watching in asia, and we'll get on to you in today's show on, as well. sideline. instead america's trading partners in asia have been left frustrated. we'll have the latest from the apex summit in bali. plus at 10:35, a new hsbc
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report shows infrastructure trade will triple by 2030. we'll ask whether the surge is likely to come from developed or emerging nation peps. investors appear to be stamping their seal of approval on the royal mail ipo. but does a last minute rush before the deadline suggest the government's share price evaluation was wrong? we'll get the latest at 0:20. and it was bought for $200 million in 2001 and now it's worth $250 million. we'll be joined by the co-owner of the ultimate fighting championship. to find out how he helped make the franchise a knockout business. and from knockout to shutdown, as the crisis run was on stateside, attention turns to october 17th when the u.s. faces default. or indeed, does it? the treasury department could
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juggle the books, he thinks, for a couple of extra weeks. any thoughts or comments on any of what we're going to talk about today, please, e-mail us, it's day eight of the u.s. shutdown. the president says he will be willing to accept a short-term deal. a former u.s. budget director is floeth an idea to reopen the government and raise the debt ceiling. it would give the president government funding and the gop at that cross the board spending cuts currently in place under the sequester. the performance proposal may not gain any traction. joining us for the first part of the program today, charlie
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diebel from lloyd's wholesale banking and marketing. charlie, good morning to you. >> good morning. >> we've seen u.s. treasury ten-year yield spiked up. six-month yields have spiked up. are we going to see any more adverse pry reaction or not? >> to be honest, it's in the hands of events now. if the political situation is resolved, then we revert to a very minimal economic impact, treasuries linked to sell-off by 2025 basis points in the ten-year. and we're back to a u.s. economy that's doing okay. the alternative, and that's why the markets are kind of, you know, stuck, they're in pause mode waiting for news. at some point, you know, i mean, i tend to agree that the 17th of october deadline is poorest and that they will still have some funding thereafter. but, you know, according to cbo
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estimates, certainly by the 30th of october, the u.s. effectively will have run out of money. so it is coming even if there is no specific date. every day that goes tapast, i expect the market will start to panic because no one knows -- >> what would panic look like? >> well, that's exactly the problem. no one knows what it's like for a technical default from the world's global reserve currency. it's never happened before. so we don't really know what it looks like. >> i'm just wondering what that would be like, to maybe think about pricing that in, what action -- >> i mean, it's got to favor safe havens, but does it favor treasuries? that's the real question. should it help gilt? yes. jgbs? yes. all those countries theoretically should see government efforts improve and yields fall. but what does it do to
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treasuries? given the fact that there's cross default lines n states, you could find those issues that have a november coupon will go into technical default where those with a may coupon won't. and thereby, you get this big dislocation in terms of actual market value because those issues will be in default, but those ones won't. >> not anybody thinks that's going to happen, though? >> no. >> and that's -- but is that -- >> everybody thinks we'll run up to this deadline, they'll do something. so everybody is supposed to be thinking about -- are you thinking there will be a buy yacht or a sellingoff? >> well, i mean, this is it. and it is that complacency that worries me. we are sort of sailing towards the edge of the precipice and everyone is going, no, the that's all right. they'll turn the boat around any second now. we'll be fine. because of that assumption perhaps the pressure to get a deal is less pressing. you mean market pressure? >> yes. and that means you're in a
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situation where, you know, we have a series of u.s. bond auctions this week. they're probably relatively well subdescribed. if i told you that the u.s. is about to default but there bond actions will be well subscribed, it makes no sense whatsoever. but that's the kind of paradox we're faced with right now. and i think that continues at least until we get some clarity as to how long this is going to go on for. it does seem too awful to contemplate that it will actually happy and the u.s. will go into default. but it's a nonzero probability and that's why the market refuses to really take it seriously. >> charlie, stick around. we'll get more from you. on italian banks, dipaschii rallies again today. it includes around 3,400 additional job cuts. cnbc has been speaking exclusively to the ceo about the details. >> the logic behind having
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raised our profitability objectives for 2017, while continuing to reduce the risk profile of the bank is to ensure that the bank will become a viable one by the end of this period sflp. >> you also spoke about the long-term effects of the plan, particularly in terms of job looses. >> in light of the more challenging objectives that are a part of this new plan, we must work to complement those actions to make us more productive. in particular, strength in our commercial distribution. let's not forget that was 8,000 less employees, we will be dif in the nigz raise our productivity. >> very nice. very honored to have you here. >> a pressure. >> what do you make of what they've announced? have they gone further than what we mif thought? >> they've gone further than what they initially thought to do. this is what he agreed with back in september saying they needed a bigger capital hike.
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so for one building that's expected, they're going to go for 2.5. the question is, will they be able to close this or not? they had time to do it. in the meantime, the markets are reacting well because of the fact that this is an aggressive, ambitious plan. administrative cost cutting as they're going forward with the closing of branches. they they should become more -- they should improve by that standpoint, but it's an ambitious revenue. for new, the market seems to like it. will they be able to raise that capital? so going forward, most likely, they're going to have to go with some sort of a merger and then they have to sell even. >> it also depends, i suppose, on the market sentiment generally, as well. but, you know, a lot will depend on sentiment over the next year. >> absolutely. and, you know, there's a much bigger european question instead of, you know, how much support,
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you know, the sovereigns are able to give while they continue to be somewhat under pressure and their own funding costs are so high. i think that's still a major structural problem. >> also, the question has come up about, you know, the ecb lacks support. they're now talking about may punishing banks who can't wean themselves off ecb money. >> yeah, which -- >> which is like let's make the weaker bank pay more. >> some sort of abusive relationship they want to establish with the banking center, it makes no sense. the whole point of this provision of liquidity was to encourage lending and support the economic recovery. so then sit there and say, well, you're not weaning yourself off, particularly at a time when most participants are thinking they will do it, ltros to pump liquidity back into the system once the existing you stuff gets less than a year. >> and if they can't, who was saying they -- who would be in the fame for them to -- to get
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together with? >> well, there have been talks about a merger and those have been denied, but of course the previous krr eo has absolutely been against that. but he is no longer in place there, so a merger with another italian bank, selling off to somebody else, as you're saying, it's difficult to manage the situation when you have poor asset quality, when you have increasing nonperforming loans in a difficult recession in a country like italy. so how can this bank, you know, they're doing as much as they can. they say we need to make this bank more viable, but he said we're becoming more viable by the fact that we have less people doing more work. it's quite a challenge. >> claudia, thank you. looking forward to that. right now, though, it's time to bring you up to speed about what's happening onned to's global market report. we'll take a shot of the dow
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johns stoxx 600. even stevens between advancers versus decliners. we're about five to four at the moment is where we stand. let's bring you up to speed with the ftse 100. we were down 16 points yesterday for the ftse. right now, this morning with retailers in focus, we'll come on to that, as well. there we go. thank you very much. down 0.25%. the xetra dax is fairly flat. the cac 40 down 0.2% and the ftse mib up about 0.1% at the moment. a number of these retailers are down today. september figures released by the british retail consortium showing sales at 2.4% higher than the same month a year ago. that number did mark the second worst this year. it acts as a reality check for the sector. home retailer marks & spencer dune 3%. home retail down 2.35%.
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debenhams and neck, down 1.8% and 1.3% respectively, as well. meanwhile, alcatel lucent, the stock up marginally at the moment. planning to cut 10,000 jobs. it's all part of the plan to 15,000 post worldwide. the layoffs are said to be part of a cost cutting drive to save a billion euros by 2015. stephane has more for us out of paris. stephane, what do you think of it? >> hey, ross. it's part of the shift plan to reshape the group into a smaller company. you'll remember in june, the new ceo say that alcatel had to reduce its cost base by 1 billion euros annually and would sell some assets worth $1 billion euros. the target is to return to a positive cash flow from a 2015. this morning, the company announced to the labor unions the details of the cost savings
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plan. 10 on,000 job will be cut by tend of 2015. 4,100 jobs will go in europe and the east of africa including 900 in france where some factories will be closed. according to people with a plan, the job cuts will impact mostly the all technologies such as 2 and 3g, why the company will hire more people, 5,000 in its new technology department, like the 4g and reuters. with this plan, mission com hopes to put the company back on try. they're expecting this will be only the first step for alcatel before selling some assets or even the entire business to one of its competitors. and you know since nokia sold its hand set business to microsoft, there are speculations that nokia, which is now a telecom equipmentmaker could be interested in buying perhaps alcatel.
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that's only speculation. but this is what the market will look at pb ross. >> stephane, thanks for that. that's the latest from paris. yield today on sovereign debt, just a little higher. treasury ares down 2.6%. on the currency markets, dollar just nudged back a little bit higher today. euro/dollar, 1.35 6/6. away from that 1.3645 high we hit last week. 1.37 is the high for the year. dollar/yen, bouncing back from 96.55. which is the lowest from the dollar/yen since august 12th. and is pound/sterling, just down slightly. so a little bit of a reprieve from the u.s. greenback today. confidence in china's domestic driven service sector may be slipping. hsbc's service secretarying is expanding. it dropped slightly in the month of september since the month before. business expectations hit their lowest in three years.
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analysts saying it's following recent down tick necessary china's manufacturing pmi. so that's the background. let's give up on the asian session. hi, sixuan. >> hi, thank you, ross. a largely positive session in asia today at the nikkei 225 dipped to some five-week low after the down beat current account data. but managing higher by 0.3%. a slightly firmer dollar against the yen offset concerns over the u.s. political standoff. and with hsbc's services, pmi standing above auto 50. mainly in china markets gained traction coming back from that seven-daybreak. the shanghai composite gained 1%. and over in hong kong, the hang seng got a lift higher by almost 1%. and on to something the stocks in japan, sharp shares eased a modest 0.3% today on reports its
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upcoming shares offering will fall short by 30 billion yuan. and shares have tumbled over 20% since september the 18th on dilution fears. and on the hand, heavy industry gained ground rallying over 2%, this on reports developing a hybrid suv with toyota. and over in hong kong, the gaming sector also in the green, helped by a holiday week spending boost, the stakes are high as mccau officials say the arrivals in the first five days for the golden week were up 5% on the year despite bans on gaming trips. back to you. still to come, china and japan are urging the u.s. to get its ole house in order. we'll get latest from the apex summit in bali in just a few moments.
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uk retailers frofd be the biggest drag on the s&p this morning. it's the second worst growth rate this year. it says the figures served as a
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reality check on the sector. another u.s. house price survey, another multi year record. it shows house prices increase in their fastest pace in 11 years in september. the northeast of england was the only region which didn't see some growth. charlie. >> yeah. >> your assessment of the british economy. sterling has been pretty strong over the last several months. >> the data have been good. our study suggests q3 gdp will be good, as well. year on year, we're probably heading for a 1.4%, 1.5% rate. which is pretty good for the ooubs uk and better than what people were expecting. >> that would be better than france, u.s., japan. >> and that's the remarkable thing. it is testament to the fact of the positive confident effect
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that the housing market have got. as house prices go up, so goes the consumer in the uk. and is we're not doing anything different from than what we've done before. the only warning note is a lot of on that is coming from saving. so it's not rising real incomes. it's coming from people running down. >> it's squeezed on real wages. >> exactly right. so we have the crisis created this big surge in savings. it's been run down more aggressively than you would have anticipated. we're now, to be honest, back to a level where you would expect us to be from a cyclical point of view in terms of savings. but that starts to limit the potential for further consumption gains. certainly because we've spent a lot of the precautionary savings that we already had. >> the key now is whether this
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spending or savings actually leads through to businesses investing and, therefore, we can now get sustainable growth which feeds back into the -- >> absolutely. and the survey suggests ceos and cfos are feeling more confident and have stronger investment plans going forward. what we don't really need now is an external shock to make people cautious once again. that brings us back. >> yeah. exactly. >> if that doesn't happen, the setup is pretty good. >> is the pound at about its range now? >> no, i don't think so. even though the data will soften up into next year, we have a couple more months of decent ratings releases. and, you know, we tend to think sterling still has another couple of months in it. we could get cable towards 165 pb maybe slightly north of
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there, but that then probably will be the peak. >> i've always thought 1.5155 on cable is a natural range. where purchasing power, whatever, is that sort of where it should trade? >> and, you know, 1.50 is a very, very long-term average for that currency. so the further you get from it, the greater the graph stational pull. but we still think it has some legs. but you're right, it is getting towards the end of its cycle. >> and do you post on many letters in your family? no. it's all e-mail these days, e-mail, text, twitter, the lot. >> still, it hasn't stopped a bit of a rush for the people wanting to buy shares. companies being sold off too cheaply. heaven forbid. businesses brohimia has been tracking this. this is a difficult one. you have to make the float a success, but you have to get some money.
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>> it's a tricky one for politicians and for the banks because they want to price to go up, but they don't want it to go up too much. remember, this is the biggest privatization in the uk in 20 years. and this week is the turning point. tonight the order books close. then at the end of the week, it's going to price next week trading is going to kick off. and it's all about where that stock is going the price at. and we've already seen the government revise up its price range to the top end, 3 pounds to 3 pounds 30 because that demand is so strong. but people like ig index are chicago there's are going to be above 4 pounds, even. so even at that range, 3 pounds to 330 pounds, a multiple of 5.5 times 2014 earnings. that is the low.
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deutsche post, rival, tnt, shows there is a lot there. the government is selling down with 30% going to retail investors. that's one of the biggest sell-offs to the retail space that we're seeing. back to you, ross. >> okay. thanks very much indeed for that. come back and join us. charles, which is sort of -- we had no ipos for a long time. >> for a very long time. >> then we get a government ipo and bank, suddenly we're back. it's like the hat was off. >> and that's what confidence is. you know, the biggest problem you faced post financial crisis was the lack of confidence. you know, households would not actually that negatively impacted perhaps. but they saw the headlines and
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it made everybody cautious. now, that is both a negative and a virtuous circle, depending on which stage in the cycle you're on. we have to generate a confidence circle over the past six to nine months. and long may it continue. we lost a lot of output in the last five years and we've got a lot of ground to make up. >> when we floated british goes, everybody had the famous sid campaign. this seems to have come back with a vengeance. why? >> don't forget, this is the fifth attempt at privatizing royal mail. >> why is that -- >> well, if you read the political information, you'd say they have done it right this time. they're doing it the transparent way, in the market. and there's time to get -- >> exactly. the post men and women are getting 10%.
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and even though the unions have kicked up a fuss stwb people within government say, actually, the demand from postees for this share have been in the high 90s. >> so they're going to make a lot of money. >> yeah, they're going to make a lot of money. >> so they could sell tomorrow. >> they could sell off tomorrow. >> and you've got labor saying the property is undervalued, the shares are under valued and the government has to do more. so they've got a balancing act in a market and probably two weeks that are a difficult conditions given what's happened in the u.s. >> i would just turn around and say look at all the money we've made for the employees. >> the post men are all
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participating, then surely that's a very nice wealth sharing scheme. >> wealth sharing and kind of the retail is huge. it's like 30% to retail investors. a lot of institutions are not going to get what they want. >> i have been -- with fund management companies telling me to take up. now that i'm allowed, you see, i'm not allowed. but i noted there had been big marketing efforts. that's it for now. thank you very much. still to come on the show, with the dismantling of barriers set, global trade on a path without pace? gdp growth trade report is coming up next.
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these are the headlines from around if globe. it's day eight from the u.s. shutdown. one lawmaker is circulating a plan to raise the debt ceiling. china and japan show their unease with the closure, warning the u.s. to avoid risking a default that could upset the global economy. shares in monte de-pas is chi unveils a bigger than
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expected capital hike to get owe u approval for its bailout. now, some of the america's asian trading partners have been growing rather impatient with the u.s. shutdown stalemate. but china and japan are urging them to avoid any risk of defau default. america says it's highly committed to the region despite its no show in bali. our very own martin soon is in bali with more. martin, here we go. there's a picture we're showing at the moment w of lots of colored shirts. you are wearing your own. i'm very impressed with that. what's going on? it's very nice. >> oh, well, thank you. thank you. it's -- well, thank you. thank you. we're just trying to get -- as
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they say, sympitico with the story here. it's wheat leaders and i are wearing. it is a traditional balinese textile made into the short sleeves and long scheaf shirts. this is the so-called national costume that all 21 is leaders including secretary of state john kerry with wearing. it's a woven textile, sort of like ecot if you're familiar with that. and this group photo with the national costumes or clothes, that's been sort of a feature of apex summits every year when they're held. so just to give you a look and let you see visually what this is all about. but i want to get to the news, ross. just a couple minutes ago, the two-day summit wrapped up the final declaration that came out which is the same as the final communique out of other summits. they're acknowledging that, a, growth is slowing, trade is weakening, but they're promising
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all 21 members economy toes pursue prudent macroeconomic policies to make sure the financial system is stable. that doesn't honestly tell you much. when you dig down, though, get more granular into the details, what sprang up to me was they're promising to continue supporting the maul tie lateral trading system, that's one, which basically means wto. it's been 12 years for the doha rounds. it has gone nowhere if you want to be charitable. if not, it's near death. indonesia for one, and obviously apex are still intend on trying to pull a rabbit out of the hat. they are meeting for a ninth round of doha talks here in bali in december trying to do a deal on what's bog called doha light. the idea being if you can't get a huge comprehensive deal, then let's focus on small deals, food security would be one and cutting bureau on the okaysy at
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the border, in other words, red tape. they're saying if they could do a deal on that, it could add $1 trillion of fresh growth to the global economy. but, again, the wto on's recent track record in terms of achieving deals has not been good. you mentioned at the top, ross, that both china and the u.s. are saying that, look, you need to resolve big issues like the crisis in washington. plus, there's a lot of attention on china's slowing growth. that got the attention of, obviously, australia, which is a huge supplier in terms of commodities to china. but xi jinping addressed those concerns and said slowing growth in china, even at about 7%, twice, this is what we intended and that is what we planned. take a listen. >> we have recognized to fundamentally address economic development, china has to press ahead with structure reform. even if it requires some sacrifices. they must have an undertaking, one has to look far and plan
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widely and to take both the long-term and the short-term needs. killing the hand to get the ax, draining a pond to catch fish is no formula for sustainable development. >> and chinese president xi jingpin there speaking at the time summit earlier on. you might be surprised, maybe you might not be because you follow these things minute to minute like i do. but for a lot of the country necessary china's model for freeing trade further, our step, which is the regional comprehensive economic partnership, this is what's fighting against tpp, you know, 16 countries in there already including japan, south korea, india, all the cubs, guess who is their main number one trading partner right now? with the exception of india, it's china. and i think that says a lot about the current state of affairs. >> it does, martin. thanks for that.
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also, just get me probably a medium/large one of those shirts would be great. i said medium/large. >> it's in the mail. done. >> thank you. thanks, martin. the director is being cheeky. now, in south korea, the government may give workers a break by shortening maximum weekly work hours. hi, cherry. you've got to stop doing those six day a week 12-hour shifts. >> exactly. and you wanted me here on "worldwide exchange," ross, for my long hours of today. but you know what? let's talk about why the change. we do work long hours here in south korea, ross. last year's figure was not available yet for korea, but south koreans worked 2090 hours be worker in 2011 bht oecd
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average was 1765 hours. so more than 300 more hours of work for south koreans. so the government and the ruling party are pushing for a bill that could cut the -- that would cut the maximum work hours per week from the current 68 to 52 hours starting in 2016. now, that's good news for people like me, but for businesses, of course, it can squeeze them even more. we're already getting negative feedback from a business lobbies here. now, to reduce the negative impact of this bill, ross, the government and the ruling party are considering at least gradual implementation of this new system so that the country can sort of ease into the shorter work hours starting in 2016. now back to you in london. >> all right, chery, good stuff. thanks. try and shave off some time at the other end of the day so you can still make this. that would be okay.
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>> got it. >> thank you. we appreciate it. >> the ftse mib is up 0.1%. the cac 40 down 0.3%. bond market deals nudged slightly higher this morning, not by huge amounts. on the currency markets, the dollar has a slightly -- i don't want to say -- it's a firmer tone is what i want to say this morning. dollar/yen, just up to 97. we were down this morning. euro/dollar, below 1.36. cable just above 1.60, 1.6050. still to come on the program, could global trade be set? hsbc thinks so. we'll find out why, just after this.
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hsbc says interrelated trading will double by 2013. it will boost their share in global trade. james, good to see you. thanks for joining us.
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it's quite a bullish forecast for this on trade. how is that going to develop? what is it going to look like? >> well, ross, i think what you're seeing here is we had a deep dive into infrastructure and have a look at what's taking place. why? because we see infrastructure increasing as a proportion of manufactured trade taking and going up to about 54% of trade by 2013 f from about 45% at the moment. and that's quite a significant change because it reflects two things. one, investment infrastructure. so that is investment in machinery, investment in goods, increasing productivity and factories and so on. and infrastructure for roads, railroads and so on. >> and who is going to -- where is this coming from? we think of the emerging markets in india, brazil and china. is that what's going to drive it? >> i think that's absolutely right. the emerging markets are a story here.
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china is a very important play. and what you see on the investment equipment piece is china becoming -- in fact, overtaking the united states by 2013 as the biggest importer of investment equipment. this equipment, factories, the higher value added production and so on. and india, on the infrastructure side again overtaking the united states as an importer of infrastructure by 2013. but also, malaysia, vietnam, mexico, are all key players, but it's important not to forget that developed markets in their own right have to advance. so this is a global story. it's not just the story of emerging markets. >> as china scales up its manufacturing abilities, it scales up the chain by what it manufactures. is the equipment going to come from the developed world? >> well, i think you'll see it coming from a number of markets.
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but in germany, france is currently the biggest export partner for germany. china will overtake france as the biggest export market for germany by 2030. but what you're going to see, and there's another side to it, if you go next to germany to pola poland, china becomes much more important as a key provider for equipment for poland in its own right. what that means for developed markets is that they themselves have to continue to innovate, continue to move up the value chain in their own right. but the china story is absolutely a key part to this. james, it's charlie. i was just wondering how -- i mean, clearly in emerging markets terms, there is plenty of scope for expenditure at a national level, almost. whereas you have strong corporate sheets in the balanced world. i assume what you're looking for here is that it has largely
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private sector driven rather than government or public sector driven. >> we haven't gone down and broken down the two. but absolutely, there's the components of both the private sector is by default going to be the biggest user of the investment equipment. this is the sort of equipment. if you picture it as manufacturing kit, robotic arms and so on. and one way to look at it in southern china, i'm here in hong kong at the moment, actually, and just north of here, you've got a lot of factories who are moving themselves into higher value add equipment. and they need that to effectively take that next step effectively producing labor in that region. so is it's a symbiotic story, but it's driven by demographics, urbanization, and indeed the supporting investment for that.
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>> thanks for that. now, japan's august current account surplus missed estimates by a country mile. we have the story from the nikkei. toshiko. >> hi, ross. japan's minister of finance says its current account surplus slipped 64% on the year to $1.6 billion, driving this was a larger trade deficit outweighing returns from overseas investments. competitiveness overseas, it's pushing up import costs. japans investing more overseas, but foreign companies in japan are sending more profits back home, pulling the income down. but some economists are optim t optimistic saying the current account sur is plus will likely
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expand gradually and are recovering exports. ross, back to you. >> all right, toshiko, thanks for that. charlie, what do you think of japan right now? >> it's been a strong story. and the aggressive plans from the bank of japan have, again, if the story of confidence, that they've management to start a process of starting to pull out of this deflationary trap. but there's big hurdles. the last time they did it, it didn't end well. it threw the economy back into a deep recession. so they're really going to have to -- they're really going to have to gum, system, particularly from the jank of
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jap japan. while they're great, that's great. but you have been a strong shift from the japanese banking sector decreasing their jgb holdings, pushing them back to the bank of japan. that's all well and good, but what we need to see is a self-sustaining consumption -- >> it's all well if you file for corporate taxes. you need the stopping consumer to get them to invest. it's not a defact your lower tax rate that makes you want to go and invest. >> absolutely. corporate balance sheets are in pretty good shape in japan. the problem is largely dem dprafices. japan is aging quite rapidly.
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>> are you surprised that they still have that scare? they've gone quite a bit lower. >> if you were to look at the market pricing, that's given you a warning sign. because the fact that the yen hasn't continued to weaken, it's broadly speaking or been in a range after its prior surge. and the fact that the yields are have started to go down again. equally, you can sit there and say the market is expressing some caution as to whether abe's plan is going to work. >> meanwhile, as expected, indonesia's central bank is taking a pause to tightening. bank indonesia hiked rates aggressively. but the rupiah and inflation has stabilized since the fed delayed its own tapering.
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>> the key discussion here is actually minutes today out with the fed when we get through whatever happens with the government, when do we go back to wondering whether the fed will start tapering and, therefore, putting pressure back on indonesia? >> if there wasn't grounds to taper at the last fomc meeting, there are less reasons to taper now. now, if this continues for a number of weeks, the macro impact is going to be notable and, therefore, q4 is going to be soft. >> and it wasn't really have the right data. >> it won't have good data to judge into q1 is. you could be seeing a realistic fed tapering, not until q2 of
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next year. does that resurge? possibly if they leave the taps open too long. the u.s. economy is doing okay. it's not doing fantastically. >> whether they actually knew that they were going to be in this twitter impasse. >> maybe they have incredible foresight. but they obviously -- maybe they walk into a few politicians. >> it does suggest a fairly good degree of foresight that they didn't taper under the circumstances. >> yeah, okay. meanwhile, alibaba has ditch today hong kong stock exchange, but going public on wall street may not all be smooth sailing.
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they're not just seeking the shares, but also the right to control board appointments. lloyd's say that may leave u.s. equity shareholders with too few rights. we're skd asking if you would buy twitter. head to to cast your vote and trade away you'll begin to see the trend. naturally using #trader poll. steve jobs impact on the business is still being feld. but not because of the performance of the stock. >> i came to the conclusion that
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it was unlikely that a man has really awful as i think steve jobs was could possibly create a create company for the long-term. >> he described him as mean. we want to know, does character matter? would a ceo's personality orr leadership style stop you from investing in their business? join the conversation, e-mail us, tweet us @cnbcwex or direct to me @rosswestgate. i think the implication was everybodyively while he was alive, he was great at running it, but didn't feel -- >> the corporation was no bigger than the man. >> i think that's what he's alluding to.
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>> it was triven by one individual. and to institutionalize that and make it a corporation is difficult. >> before we let you go, final word then, why do you think we'll be the end of this week? >> with the u.s.? >> yes. >> i don't think we'll be any closer to a resolution. >> bond yields are probably weaker. before that, minutes today, are they going to show us actually the fed has for every member there's a different opinion? yes. the that's exactly right. you only have to look at the member tear to know that. and that's part of the reason the market is struggling. it's not singular. it's multiple. i think you're going to get quite a mixed message. but if anything, maybe it's a buying opportunity for treasuries.
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>> charlie, good to see you today. thank you very much. charlie diebel. what's on the agenda in asia tomorrow? with the apex summit wrapping up in bali, the leaders move on. in japan, the bank of japan releases its minutes and plenty of september sales reports due from taiwan he's firms including umc, tsmc and au opt. still to come, will the dollar hold the continued weakness? second hour of "worldwide exchange" right after this.
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this is "worldwide exchange." i'm ross westgate. china and japan show their unhe's with the closure stalemate, warning the u.s. too void risking a default that would upset the global economy. corporate news shares of monte de paschi unveil ago birth than expected 2.5 billion euro
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hike to get eu approval for its bailout. and the latest cost duting measures, the telecom cost cutting measure reducing head count by around 14%. very good morning to you. the dow is off around 6 points. the s&p down 14 right now. the dow is some 11 points below fair value. the nasdaq is about a point below fair valuable. so all to play for, really, for the u.s. equities this morning. the dow jones 600 is justify off 0.1%. european equities is somewhat mixed.
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the ftse and the cac down around about 0.3% this morning. the ftse is down by retailers. so that's can ftse down 0.5%. the zex ra dax is off 0.2%. the cac 40 down 0.4% and the ftse mib is fairly flat this morning. yielding just under 2.6% this morning. on the currently market, the dollar has just got a tone on it. so not quite on the eight-month lows for the dollar index. euro/dollar, down to 1.3566. moving away from the high that we've seen recently. and japanesent, we did hit the low since august 12th. currently just below on 97. sterling is a little weaker, 1.6059. aussie/dollar slightly firmer, but not a huge amount. that is where we are right now in european trade. to wrap up that asian session for us, sixuan joins us out of
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singapore. >> thank you, ross. asian markets mostly finished in the green. the nikkei dipped to some five-week low after the down beat current account data, but management to end higher by 0.3%. a slightly firmer dollar against the japanese yen over the u.s. political stand still. with hsbc services pmi, sentiment lifted china markets gaining traction coming back from a seven-daybreak. shares have tumbled over 20% to september the 18th on dilution fears. and on the other hand, fugi heavy industrial gained 2.25%
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over reports it's developing the hybrid car with toyota. gains today helped by a spending boost. tourist arrivals in the first five day of the golden week were up 5% on the year. despite the new ban on gaming trips, total gambling revenue is expected to be 14% to 17% higher than a year ago. back to you. >> all right, sixuan, thank you for that. have a good evening in singapore. now it's day eight of the u.s. government shutdown. and there are a few glimmers of hope. the white house has president obama would be willing to accept a short-term deal to raise the debt ceiling to get past the october 17th deadline. but it's unclear whether it has the votes to pass. republican aides say ohio senator rob portman, a former u.s. budget director is floating
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the idea to reopen the debt ceiling giving the gop the across the board spending cuts currently in place under the sequester and raise the debt ceiling. but portman's proposal may not gabe any traction. at the same time, new polls show the republicans are drawing more fire from the government shutdown than the democrats or president obama. a survey by the pugh research center find 38% blame the gop while 30% blame the administration. that's more sharply divided than two weeks ago. but 58% of democrats and 54% of republicans say it would be unacceptable for their side to back down. that's not a great stat. overall, a majority of the public is concerned about the economic impact of the closure. at the same time, top wall street executives warning that any efforts to prioritize payment of the u.s. debt ceiling is breached could pose risks. according to the journal,
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meetings with the white house bank ceo ons say putting some ahead of others would create uncertainty, driving up interest rates and disrupting markets. the general said the social security administration has begun warning that it can't guarantee it will be able to make full benefit payments if the debt ceiling isn't raised. now, as you saw earlier, the dollar is just sort of off its recent lows this morning. are we likely to see if we get to the end of the week with no clear resolution, are we likely to see more pressure on the dollar? if so, how much more? >> sure. first of all, ross, i don't see any resolution happening by the end of this week. to look at the market as a whole, i think the market has taken the whole u.s. dollar scenario complacently, casually. this is the mothership. the mothership saying, houston, we have a problem. we've got no money left, we
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don't know what we're doing right now. and the politicians between them having a feud. equally unsettling is the proposition on the table. on one side, you have the potential of a default. which i guess we don't want to talk about this in terms of what would happen if that was to follow through. on the other hand, what the republicans are saying is we want a 600 building spending cut. >> what will end up happening is this could carry on for another week, two weeks, four weeks, definitely past market expectations. eventually, it will have to give up something to do with entitlement spending and we could get some kind of compromise.
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>> under that scenario, how will asset prices react? >> the u.s. dollar will definitely weaken, going up and to that point to the point where we get past 17 for december, which is moving targets. >> they're saying there's suggestions that there's some surfaces in september they might have more money, yeah. >> so up until that point, the dollar will keep weakening. i wouldn't be surprised if we get a dollar weakening. i won't be surprised by the same token, whether we see equities also falling. >> they're not going to default. they are going to increase the debt ceiling as they did the
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last time. but i'm sure we will have some panic. >> they sort of maybe need a kick from equities. >> i think the politicians are fully aware of what the scenario is and what the circumstances are and what actually is the result. they know if they get close -- >> everybody sort of expects some sort of scenario like that. we push, we push, we push and then we get some sort of resolution. if anybody seeks the same way, you may not sell off the dollar because what everybody is doing if we do get sold off, we're looking for an opportunity to trade and get back in. so when the herd is speaking the same, it's difficult to get the moves you expect sometimes. >> you're right quite. it is obviously in terms of if
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that would happen. this is obviously the thing that would happen. >> the market has gone the opposite way for quite a long the period of time. equities themselves, we had a dip after the tapering. the tapering didn't stop. it should go down and doesn't want to go down, it's only going to go up. the fact that you vice president got this tapering on qe, it has that deal. that has to filter into equities. even though you might argue, equities may not have that blitz, it just means you're carrying those lines. >> and no one has any reason to buy. thanks so much. now, the u.s. fed has launched a new high tech $100
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billion. it has new features, including a blue 3d security ribbon and a copper bell that turns green at an angle, features that authorities say are difficult to replicate. the $100 bills are reportedly the most counterfeited, but the bank note hasn't been completely redesi redesi redesigned. the benjamin franklin is still on the front. saturday marked the second anniversary of the death of apple founder steve jobs. but on monday, billionaire hedge founder julian robertson revealed to cnbc that he had dumped all of his shares in the tech company in january, but not because of the performance of the stock. >> i came to the conclusion that it was unlikely that a man as really awful as i think steve jobs was could possibly create a
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great company for the long-term. >> so we're asking does character matter? would a ceo's leadership style or character matter? join us here on the conversation. e-mail, tweet direct to me @rosswestgate or @cnbcwex. still to come, a second day of rises for monte de paschi. cnbc has been speaking exclusively to the ceo. find out what he had to say when we come back.
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and the sex and third biggest economies in the world, china and japan, put pressure on america to resolve its stalemate. and jobs in the u.s., europe and asia all set to go as french's telecom company reveals its global cost cutting plan. also in corporate news, monte de paschi approves a plan to return to profit. overall included around 3,400
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additional job cuts and ames to cut costs by $440 million euros. bank agreed to a bigger than expected 2.5 billion euros share sale. cnbc spoke exclusively to the ceo about the plan. >> translator: the logic behind having raised or profitable objective for 2017 while continue to go reduce the risk profile of the bank is to ensure that the bank will become a viable one by the end of this period. >> joining us now in the studio, claudia. now, this is all part of a -- they had to get eu approval for the bailout of monte dei paschi. will this mean the bank's future is secured? >> this is a plan that is expected to make the bank a viable bank. clearly, it's a very aggressive plan that they have put into place for the next three years in order to turn to profitability by 20 is 15. there is a bank that has lost 8
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billion euros in the past two years and it's a bank that's been weighed down by many issues, the crisis that the we have seen in the financial sector and as well a costly acquisition they made in 2007. so let's take that the old way of doing banking has weighed on the health of monte dei paschi. the question is will they be able to? so, of course, the 2.5 billion capital hike they need to carry out by tend of next year is a big question mark. >> if they weren't going to survive on their own, would there be someone that is natural partner for them? >> that clearly could be the case. let's say that if this capital hike doesn't go through, the state aide, which is 4.1 billion euros would become equity and the government would buy -- it would be nationalized by all
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practical purposes. but before get to go that point, if the capital hike can't go through, talks could start on a possible merger. there has been talks with italy's largest bank, but that has been sort of denied, let's say. i think the ceo would have looked very well on to a merger of that kind because it means taking on once again keeping something that was not functioning in that trying to make it live longer than it probably should. >> just move into the sector as a whole in italy. we're trying to work our way towards fresh bank tests and, you know, penal -- we're talking about now maybe penalizing banks that stay too long with ecb liquidity loans. how thould they fare through these processes? >> they were healthier than other ones. monte dei paschi is the one
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unhealthy one. but overall, the eye tall i can't known banks are seen as fairly healthy. the crisis isn't helping. . >> and that depends on what we get from the company. how do you turn an ailing sports franchise into a $250 billion powerhou powerhouse? we'll speak with the co-owner of the ultimate fighting championship.
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just by talking to a helmet. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms
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and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. into paul tucker says we need regimes that can deal with bank failures. those comments coming out of testimony to the parliament. he's one of few central bankers speaking around the global at the moment. we'll discuss that with our business editor who will join on us on set for a little bit more. meanwhile, u.s. futures this
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morning, they were fairly flat about half an hour or so ago. got a little bit more negative in the last 30 minutes. s&p currently was 1.6% implied down. dow jones down compared to fair value. and the nasdaq is nearly 2% below fair value. not huge calls. the world sport has seen a new contender vying for the prime time spotlight. the ultimate fighting championship has groan from an attraction to one of the top five most watched sports in the u.s. when our next guest purchased ufc in 2001, it was nearly extincti extinction. today it's valuable at around $250 million. thanks for join onning us. it's extraordinary one bought it for, what, $2 million? >> we bought it for $2 million in 2001.
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>> what did you decide about ultimate fighting was the thing that was going to turn it into such a successful sport? what was it about -- what is it about on the fighting that gets people interested and prepared to pay money? >> i grew up in las vegas. i was born and raised there. las vegas is the home of all the great fights historically meaning boxing. and i studied boxing. and i looked at the fact that boxing had been around for a hundred years, generated billions of dollars and there was no brand, there is no value associated with the sport like there is soccer and the premier league. >> so i felt like with ufc, the brand, ultimate fighting had transcended the sport, which is called mixed martial arts. but we had a brand, something we could build off of. so first we put in rules and regulations, addressed all the health and safety issues for the fighters and started to promote these events for what they are. athletic events.
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>> and how did you persuade authorities to let you start putting these fights on? >> working with the authorities, working with the regulators to put in rules and regulations to address all the safety and health issues. essentially we have a sport that's a combination of olympic style martial arts. so you have judo, die want doe, box, and you're essentially mixing thoup techniques to mixed martial arts. >> we're the largest pay per view provider in the world. we'll do well over 6 million pay per view buy these year in north america alone. and we have other distribution deals around the world. we're now distributed in at 148 countries and territories, broadcast in 28 languages in nearly a billion homes around the world. so we've taken a sport that has translated all over the world.
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>> so the next major event, and this is on october the 9th is in brazil. what would your expectations be for the number of people that would pay to watch that event around the globe? >> well, it's interesting. that event will, for the motor past, be on free to air television. it will be on fox in the usa. it will be on dt here in england. and in brazil, it will be on a net world called the combat channel which is a subscription based dhanl that we provide. >> how do you -- when you're doing that, how do you broadcast it? >> typically what i'll call fights that are with the contenders, guys trying toic ma it to the championship. we like to put those on free to air to help build the marketplace. and the championship fights typically reside on a pay platform of some kind, whether it's pay per view or subscription. >> where do you see the growth?
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are you going to sell it? bring some partners in? >> we don't have a need for partners or capital. the business is profitable. right now, the focus is we have the majority of our content being aired in prime time in north america and south america. which puts it at an odd time in places like europe and asia and french times, 2:00 and 3:00 in the morning here. so for 2014 been, what we're going to do is expand the live events into major capitals around europe in prime time, provided great content for the networks throughout europe to help build the bit here and do the same thing for asia. in 20 on 14, we'll have six to eight additional events in europe and asia, places like macau, singapore, hong kong. >> will be diminish the market in the state by taking it overseas or not? >> we don't think so. we think we have a tremendous amount of growth here and there's a lot of athletes that are still training in these
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areas that need to opportunity and need to exposure. >> briefly, what do they earn, those guys? >> the top end guys are earning anywhere from $3 million to $5 million a fight. guys just breaking in earn anywhere from $10,000 to $20,000 a fight. then you have contenders that earn in this in between. it depends on their drawing power. >> fascinating stuff. we'll see how you go. thanks for joining thus morning. now we'll take a short break. we'll leave you with a look at what's on today's agenda in the united states. the august trade deficit was scheduled to be out at 8:30 eastern. it's scheduled to be postponed because of the government shutdown. the imf releases its global outlook and cleveland fed president and philly fed president will be both speak background the monetary policies this afternoon. former dow component of alcoa and yumm brands will be reporting earnings after the close. orbiting the moon in 1971.
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you're watching "worldwide exchange." i'm ross westgate. today is day eight of the government shutdown. there is one lawmaker circulating a plan to try and raise the debt ceiling. china and japan are showing their unease. they're warning the u.s. to avoid risking a default that
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could upset the global economy. >> in corporate news, the shares of monte dei paschi unveiled a bigger than expected capital hike to get approval for its state bailout. and investors pleased with alcatel lucent's latest cost out canning herb mas. it's reducing its head count by around 14% worldwide. >> you're watching "worldwide exchange," bringing us business news from around the globe. >> very good morning. you've just tuned in stateside, we start with the dow down at one-month lows. the s&p down 14. this morning, we're pretty flat right now. the dow is 12 points above fair value. the nasdaq is about a point and a half below fair value. 2 points below fair value on the
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s&p, as well. european equities have been flat to fairly down this morning. the cac 40, down 0.5%. ftse 100 off 0.7 3ers this morning. we've had some downgrades and a brc survey which wasn't one of the most positive of the career. that's where we stand right now. so what are investors to do as we keep our eyes on politics in washington? here is a recap. >> it's suffered from corporate sentiment of late. we believe that will resolve itself. italy is one of the next opportunities, along with as manager, we have to possibly add to some lower volatility equity necessary germany from valuation perspective. >> they're seeing this transition to uber luxury.
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names that have more legacy or more value than some of the other brands. a brand that is more sent rick than any other brand as opposed to things like rich montana, things like prada, which have pretty much been inspired. >> five, six weeks ago, it was very large crude in the dollar. most of that has gone. and the yen has not been a big representant. if you're going to see anything, it's a conservative trade. you could see a big drop in dollar/yen. >> now, we haven't got any u.s. data, really, to hang our hats on. but maybe we'll be helped out by the fact that we're about to get
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earnings. it's the first time in years the aluminum group has officially launched earnings season because it was removed from the dow last month. still, results come as the u.s. reporting season gets in gear. we've got this costco and family dollar reporting tomorrow w along with chevron and the big focus on friday when jpmorgan and wells fargo are now officially kicking off bank earnings. joining us with his thoughts, greg harrison at thompson reuters. good to see you this morning. thanks for joining us. >> great to be with you, ross. >> it's still the unofficial start of earnings season with alcoa today. how closely are we going to wamp what they have to say? >> i think people will be watching them very closely. the thing is alcoa is that the less people are looking at their earnings than wa they had to say about their customers. they have important customers in a lot of different industries
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from aerospace to canned beverages. i think that's the key to look at is what they've been saying about the demand that they're seeing. and that can give us clues into some other areas. >> that will still be key. what is your impression at the moment of what the q3 earnings season will tell us? >> you know, i think it's going to be more of the same of what we say in the last several quarters. we're looking at pretty slow earnings growth. 4.3% is the current estimate. 3% revenue growth. so expectations are not real high and there aren't a lot of catalysts, really, to drive earnings into that more double dij range. >> when you look at the negative announcement, how does it compare with previous earnings seasons? >> it's very negative right now. we've had 96 negative preannouncements. only 19 positive ones. so that's really helped drive this lowered expectation
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environment. the estimate at the beginning of the quarter was 8.5%. when these companies came out with negative guidance, that caused analysts to revise downward. >> clearly, jpmorgan and wells fargo on friday, financials will be in focus not only this week, but generally, as well. will we particularly be interested on what the impact of mortgage and mortgage rates? >> we will. financials are expected to have the highest growth of any sector at 9.2%. and this has been the case for a couple quarters now, driven in by large part by mortgages. we'll be looking to see how the higher mortgage rates took place throughout the quarter affected earnings. demand is down a little bit.housing prices are still rising. we'll st are still buying new homes and refinancing. but revenues from mortgages are
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expected to be down, by still driving earnings. in the sector, we're expecting to see the big banks drive earnings the most. they're having good revenues from their trading fees. and also some of them have easy comparisons to a year ago. >> and finally, when we look across discretionary consumer spending, who is going to win out and who is going to be the loser? >> consumer discretionary is expected to be a strong performer. there's a die vergence there between companies that make the more big ticket items versus others. we've seen consumers postpone purchases of big ticket items like homes and cars and appliances. they're getting to the point where they have to replace them. that's benefiting some of these, the home builder sector, the retailers of appliances and home furnishings, things like that. and that's coming at the expense of had some other items like fashion retail, restaurants,
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because consumers just don't have the extra money after they're buying these more expensive items. >> good to see you this morning. thanks for joining thus morning. the fhfa has filed paperwork for firm to replace fannie mae and freddie mac. it will consolidate some of fannie and freddie's overlapping functions. a group of mortgage bond investors have reportedly sent a letter to u.s. attorney general eric holder concerned over the government's potential legal settle manies with banks. the deal could stick investors with some of the tabs. the letter was prompted by reports it's nearing a $11 billion with the justice department. jpmorgan is denying charges by
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the cftc that it milt manipulated certain credit markets. the move suggests the banks is prepared to fight the regulator in court. jpmorgan stock is pretty flat in frankfurt. and jury selection begins today in the fraud trial of five of bernie madoff's former employ employees. the group to have defendants includes mad i can't have's former secretary. they're accused of helping to hide madoff's ponzi scheme by making false statements and falsifying records for years. the government is counting on madoff's former finance chief as its key witness. the chile is expected to last five months. and huj fund b.e. shores is reportedly closing its doors to new clients. the flagship fund generated a 20% return last year. the performance has been more modest since. the funds were closed earlier
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this year and the xos yif fund was closed this summer. many extra additional funded strategies have become less profitable. coming up, call the i.t. guy. a week after it's launched the online health exchanges, the u.s. is still experiencing difficulties. can obama care overcome its latest rollout? we'll have more after this. stick with innovation. stick with power. stick with technology. get the flexcare platinum. new from philips sonicare.
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mrns may pride themselves as being pretty tech savvy. but the u.s. government's latest for ray into commerce is leaving everyone bewildered. bertha has more in the states with plenty more. what's going on? >> ross, you know, this is a very, very ambitious project. and it was done a have very short time frame. one week since president obama's signature health care law launched the key parts of health care online insurance exchanges and the technical issues that marched the first day still persist. people in the three dozen states that are using the federal exchange continued to experience delayed on monday as well as problems setting up their account. among one of the biggest problems is the security question setup is still not
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working properly. the online enrollment system was off john life again for the night as the system was dine down to try to fix glitches. several i.t. experts say it suts from from a constell lagz of problems, including unspec'dly high demand is causing big problems and that seems to be exposing software and other design flaws because of that volume. the obama administration has blamed the high volume as being the main problem. they are adding servers but they say say they are trying to address some of the software flaws, as well. this is the first time there's been the glurchb associated with the launch of a federal program. the medicare prescription drug program in 2006 was marched with problems. officials who oversaw that program say there's still enough time to fix the health exchanges before uninsured people and those seeking insurance need to
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get coverage starting on january 1st. they have to be -- have their applications filled out by december 15th. as for how many people are managing the sign up, the white house says the administration is not going to be releasing enrollment figures on an hourly or daily or weekly basis. officials say they will report the number of visitors up to this point. it's up to 8.5 million visitors in the last few days. i did talk to an official from cigna and he says they are starting to see some of those applications come through and people enrolled. he didn't tell me how many, but given what's in the pipeline, it's just a trickle. >> sounds like they have problems and they're going to sort it out. bertha, stay there. there's a couple stories i'd like to get your views on. the first one, buy two, get a
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steak lunch. brooks brothers is planning to open a steakhouse just around the corner from its flagship store on madison avenue. the firm says it's looking for next summer for a possible opening, but it's still way out. it could serve as a like of branded restaurants. brooks brothers has been around since 1818. it comes with a button down, i think. wheen meanwhile, you were planning to go somewhere to watch the next giants game this week, you'll have to check one place off the list after the football team lost on sunday. they now haven't won a game this season. sorry to remind you, folks. manhattan club ricks cabaret has decided it won't show giants games for the rest of the year. customers turned and began booing the tv, create ago hostile work environment for the dancers who then had to work extra hard. i mean, what has it come to,
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further ya? not only are the giants not winning, but they are damaging revenue take at well respected establishments. >> not winning is putting it mildly. they are 0-5. that's a horrendous start to the season. and it certainly doesn't make me sad because i'm a new england patriots fan having grown up in boston. they did lose one, but 0 of 5, that really stinks. i can see why they wouldn't want to show the games. it's not a big loss, i don't think. >> as a patriots fan, no, you wouldn't think it was. anyway, i feel sorry for the distraction that it's clearly caused these people who are working very hard. >> and it probably means lower tips, as well. a lot of times when your football team doesn't do very well, this is true of colleges and universities. when the football team does well, alumni give more money. when the football team doesn't
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do so well, they aren't yug as sort of rah-rah. i would imagine it's the same if he club. >> a brokes brother steak, would that come with a button down? >> it's an interesting thing. my theory is they're going to load up with the sour creamed on the baked potato so that then you have to go back and buy a new pair of pants when your waistband expands. there are certainly plenty of places. you've got brooks brother down there in the 40s. so i guess not only are they making you walk less to get to the stake house, you're right next to the store. so you eat a little more, you need bigger pants, it's a way to sort of feed their clientele and their business. >> i see how that works. i knew there was a reason we kept you on for those stories, bertha. good to see you. have a good day. >> thank you. let's recap the headlines today. the shutdown continues, a
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divided congress dig in while agreeing on a confidence while the debt ceiling looms. china and japan are putting pressure on the u.s. to resolve its stalemate. [ male announcer ] this store knows how to handle a saturday crowd.
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all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. we've been asking you, dp does character matter? some ceo gs are aband yop for revealing the truth. meanwhile, day eight of the
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government shutdown, and there are maybe a few tiny glimers of hope. the white house says president obama would be willing to accept a short-term deal to raise the debt ceiling to get past the october 17th deadline. senate democrats meanwhile may introduce a bill to raise the debt limit this week, but it's unclear whether it has the votes to pass. republican aids said ohio senator rob portman, a former u.s. budget director is floating an idea to reopen the government and raise the dealt ceiling. it would give the president a full year of government funding and the gop the across the board spending cuts currently if place under the sequester. this is the new polls show the republicans are drawing more fire from the government shutdown than democrats or president obama. a survey by the pugh research center finds 38% blame the gop while 30% blame the administration. and that's more sharply divided than two week ago. but 58% of democrats and 54% of
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republicans say it would be unacceptable for their side to back down. joining us is the chief political strategist. greg, thanks for joining us. just how twitchy should we be getting, greg? >> not quite twitchy yet. i think this this week we're going to have pore you thing and finger pointing and no real progress. i still think that a default is no greater than a 10% chance. it's not zero, but i think we've got maybe a 10% chance of a default. >> yeah, okay. 10% chance. what would take us there? under what scenario might that happen? >> well, if we do get to the 17th and treasury can't make all of its payments, we could technically be in default. but i think before that were to happen, there would be some kind of emergency extension. the greater risk, in my opinion, rots, is that this goes on for
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week after week after week. and the impact on the overall economy is corrosive. and you see gdp and employment, all of the key indicators, if we get any more indicators, will start to really look very soft as we go into christmas. >> yeah. i mean, is october the 17th a final deadline? you seem to be hinting, actually, that there's probably a bit more wiggle room than that. >> yeah. who knows. i mean, you have to take treasury at their word that the 17th is the day where they have to roll over a lot of debt. there are other studies that show maybe we could get into late october, to halloween. i like the imagery. maybe to november 1. but we're arguing over a couple of weeks. there is no question that treasury faces a major crisis if we don't raise the debt ceiling. >> have we got any back channels, greg? the thing is, what struck me yesterday is there seemed to be no discussions with those things
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so at least there are back channel discussions going. we seem to have none of that at the moment. is any of that about to start? >> there's a glimmer of hope. there's talk that paul ryan in the house and rob portman in the senate are coming up with proposed deals. but, you know, right now, with the main problem is the white house will not negotiate and the republicans will not negotiate anything that doesn't have at least some alteration of obama care. so we're dug in pretty deal. and i think this very strident position on both sides is going to persist for at least a few more days. >> they're going to make uts squirm. greg, good to see you this morning. and that's just about it for today's edition of "worldwide exchange." u.s. futures are a little negative this morning, but not much. coming up next, "squawk box" the countdown to the opening markets stateside. whatever happens, we hope you have a profitable day. opportunities aren't always obvious.
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good morning. day eight of the government shutdown. meantime, dallas fed president richard fisher is blasting washington politicians for even flirting with default. and ceos are sounding the call to rise above. starbucks founder howard shaurlts urging to push for a shutdown. "squawk box" begins right now.
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good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. stocks are slumping amid no development in the shutdown fight in washington. futures this morning are just slightly weaker. you did see a sell-off yesterday. this morning, dow futures down by just about four points below fair value. joe mentioned china and japan. uncle sam's biggest critters are increasingly worried about the standoff and the shutdown in the debt ceiling. beijing and tokyo have both publicly called on the white house and congress to resolve this dispute. japanese officials reportedly held several emergency telephone comps from u.s. treasury officials yesterday. their concern is if the dollar weakens, it will mean a big surge in the yen and that has been part of what they've been trying to do with their recovery. china's finance minister s


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